You decided to buy a new house but have no idea what’s next? Well, you’re not alone. In all honesty, the process is so complex that even professionals sometimes get caught out on the details. As one can imagine the process involves several legal steps which of course make everything more complex. In this post, we try to decrypt and demystify some of the complexities involved in buying an old house.
We have broken down the process into 5 main stages:
You might notice that some of the steps only apply if you are taking a bank loan. In one of our future posts, we are going to be discussing why it makes sense to take a small loan even if you have enough money to pay for the property. In any case, we marked steps which only apply for loan takers with a “*” next to them. So without further ado, below are the steps:
Stage 1: House Hunt
- *If you are planning to take a loan use your bank’s loan calculator on their website to get an indication on your budget.
- Add and decrease 10% to your budget to get a range. So if your budget is 200K look for houses between 180K and 220K. Go online and start searching for properties within this budget range. During this stage, it is important to learn about the market.
- *Meet up with the bank and confirm your loan amount. Also, ask on terms regarding a finishing loan. It’s rarely the case that you can buy an old house and live in it without any refurbishment.
- Now get ready. This is the hardest step: you now need to find your next home. Have a look at this post on Speeding Up the House Hunt.
- While doing your house hunt be sure to get some notary numbers. Can’t help you here since everyone struggles with this. Just find the one who you think is the most genuine.
- Ok. So now you found a house you might be interested in buying. First of all, remember that you might need to fix the house after you buy it. Be sure to get some ideas on how much you will be spending. There are always things to fix in old houses even if they just renovated the whole place.
- Ask the homeowners for a house plan. Get quotes for the kitchen, bathrooms and workers in case of major works, flooring and designers.
- Learn about the real estate market
- Find a Notary
- Speak to the bank to get a clear indication of the house loan
- Find your house
Stage 2: Securing the Deal
- Get influential people to view the house. You can ask your parents, however, keep in mind that the last time that your parents bought a house was probably 25 years ago. The market changed significantly since then.
- Get an architect to assess the house. Ask the architect how much he thinks that the house costs. His guess is just as good as yours but at least you would have another opinion.
- *Go to the bank and get a loan quotation unless this was already done in step 3.
- Make sure that the homeowner is aware that you will be buying this house and are meeting the bank for formalities. Double check with the owner that he has a copy of the last arms bill. If you see any form of hesitation just ask him for a copy. If you’re fast enough steps 6 – 10 can be done in a week or 2.
- Meet your notary and do the promise of sale. During this agreement, you will usually need to give 10% of the property price to the notary. If you are taking a bank loan make sure that the contract is “subject to bank loan.” You need this clause so that if for some reason the bank won’t issue the bank loan you will not lose your deposit. A promise of sale is usually done 3 – 6 months before the contract, however, it can be even longer, for example, a year. During the promise of sale, you will also need to pay your notary 1% stamp duty.
- If you are a first-time buyer make sure you specifically mention this to your notary since there might be government schemes which might apply.
- Make sure the current owner is aware that he might need to produce an EPC (Energy Performance Certificate). Find out more about it here. It’s basically a certificate to show Energy Use and Carbon Dioxide Emissions for the house.
- Get a second opinion on your chosen house
- Sign the promise of sale – you will need to pay 10% deposit and 1% stamp duty
Stage 3: Applying for the Loan
- *Go back to the bank and start the home loan application. This usually involves that you get an architect to fill in a building assessment. The architect will take around 200 – 300 euros for this application.
- *Start asking getting quotations from insurance companies for life and home insurance.
- At this stage, you might be asked to go for the land registry certificate. This can be collected from Valletta.
- *The bank will hopefully issue a sanction letter. The sanction letter includes all terms and conditions of your bank loan. At this stage, you are usually asked to pay any bank fees.
- *Give a copy of the sanction letter to your notary.
- *Now it’s time to apply for the insurance policies: you will need insurance for your home as well as anyone paying for the loan. You might be asked to do some medical tests in order to apply for life insurance.
- Chase the notary to finish his work.
- Continue chasing the notary to finish his work 🙂
- Apply for the bank loan
- Speak to architect to fill in the building assessment
- Get a land registry certificate
- Apply for insurance policies
Stage 4: Contract
- Contract date. Go to the bank and sign your contract. You will need to pay the rest of the stamp duty (4%). Also, your notary will be sending over his bill.
- Congratulations! You finally have a house 🙂 Shortly after this date, you should receive a receipt from the stamp duty. Usually, the notary should pay these within 15 days from the deed of sale.
- Sign the Contract
- Pay the rest of the stamp duty (4% of the total price)
Stage 5: Post Contract
What we’re not done yet? Don’t worry a few more steps to go.
- Go to your new house and make sure everything is in the right condition. Be sure you take note of the electric and water meter numbers.
- If the house has an electric meter you will need to go to arms and transfer the meter. The process may vary, however, you generally need to fill in the change in consumer form. The form should be signed both by yourself (the new owner) and the past owner. Even if there might be more than one homeowner, the meter is usually registered under 1 of the new owners. You will also need a copy of both parties’ ID card, a copy of the last bill and a signed copy of the contract.
- While you are at ARMS also take the opportunity to register yourself as a resident of the property so that you benefit from government subsidies. You can do this by filling up the following form. You will need copies of the ID cards of the new registering residents. Unlike popular belief, you do not need to change the address of your ID card in order to register yourself as a resident.
- If you plan to live in the new house I would also start informing any companies who send you anything by post. To assist with this Maltapost also offer a service to redirect mail from your old address to your new home. More information about this here. I would start with the bank, you don’t want your credit cards to fall in the hands of the wrong person. You then should probably consider changing your ID Card. You can do this by filling in this form.
- Transfer Electric Meter
- Register yourself as a property resident
- Change ID Card
- Redirect post
Yep. That’s it. That’s how you go from no house to a house and no money in your bank account 😂 Even though we tried to go into as much detail as possible you might encounter some other steps we didn’t go through in this post. If so feel free to let us know in the comment section below.